Jobs for growth

Sri Lanka in its quest for growth has to surmount an 

enormous challenge; more and better paying jobs. But how are these jobs to be created and where will Sri Lanka find the people with the right skills to fill them? 

Since the end of the war nine years ago Sri Lanka has seen a phenomena commonly referred to as “jobless growth”. What this basically means is that Sri Lanka’s post-war growth was driven by non-tradable goods, primarily large scale infrastructure development. While this provided respectable growth for a limited period of time the mounting debt burden meant that it would be short-lived.

Growth, to a lesser extent, was also driven by consumption, particularly in the north and east where decades of conflict had kept down demand. But growth in the real sense of the word has evaded most of the provinces as evidenced by GDP contribution. For decades the Western Province has contributed more than 40% of growth and continues to be the biggest employment producer. To make matters worse Sri Lanka has a rapidly aging population. So what needs to change?  

Sri Lanka is attempting to move away from a public 

investment dependent economy dominated by the State sector to embrace a new private investment-tradable sector-led growth model, in which a large, skilled labor force will be vital to driving growth and addressing the challenges presented by the demographic transition to an aging population. 

Improving the supply of jobs, through attracting more 

foreign direct investments (FDI) to plug into global and regional value chains, improving the environment for trade, business, innovation and entrepreneurship are essential.

Equally important is addressing the supply of labor, by encouraging female labor force participation and equipping students with the relevant skills required in an aspiring Upper Middle-Income economy, the World Bank has pointed out in its latest Development Update.

Regional disparities too must be addressed. The consequences of the conflict are still visible in the labor outcomes in the Northern and Eastern Provinces, with employment rates in these provinces still below the national average – 44% and 42% in the Northern and Eastern Provinces as compared to employment rates of 50% and 54% in the Western Province and other provinces, respectively. It is clear that post-conflict provinces need to create the most jobs.

Across the board, reforms could grow the Sri Lankan workforce as the country aims to create 1 million new jobs through a knowledge-based, highly competitive, social market economy focused on inclusion. This means attracting investment into high skilled sectors and also equipping the workforce to be competent in these sectors. Central Bank Governor Dr. Indrajit Coomaraswamy in a recent address noted that the reason Sri Lanka managed to maintain solid 4% growth during the war was because of the demographic dividend but as an aging population Sri Lanka would have to move into areas such as innovation at a much earlier stage than other countries with similar emerging market dynamics. 

All this calls for a legal overhaul of labour legislation, greater investment in education, especially higher education, attracting the right kind of investment and stronger attitudinal changes to attract more women to the formal labour force. Job growth is the perhaps the best way to 

measure tangible growth.